Valuation of Special Assets

I have been away in New York City for the past week (which explains my posting gap). While my wife and I were there, we had the good fortune to stay with some close friends. Our friends Joel Moskowitz and Sally Bernstein live in the Gramercy Park section of Manhattan. Joel owns his own business designing and selling hand tools for woodworking (check out www.toolsforworkingwood.com), and is an avid collector of rare books about woodworking and antique tools. We got to talking about the value of his collections, and I suggested that, in a typical estate administration, such a collection would be valued by an appraiser or an auction house when determining the value of the estate.

Joel was adamant that a typical appraiser or auctioneer wouldn't know the first thing about the true value of the rarest books or tools in his collection, and wouldn't value them correctly. And he's right. For most of the ordinary things people own (cars, clothing, furniture), a typical appraiser would be appropriate to value the estate. But what do you do with the book about woodworking from the early 19th century, of which there are only three or four copies in the whole world? Chances are the typical appraiser wouldn't even recognize the rarity of the book, much less be able to appraise it properly.

Joel's concerns point out a not-too-rare challenge in estate planning. If you have any kind of special asset, such as a collection of rare items, or anything that is unusual or difficult to value, it is critical to specifically identify it, and to name appraisers and others who could properly value it. As estate planning attorneys, it is our job to make sure that any special assets have been properly identified and that their valuation and disposition is properly accounted for. Things to think about when you are listing the items you own are:

• What special collections (such as coins, books, antiques) do I have?
• Are there any rare or unusual items that I have inherited or have been given as a gift?
• Are there any other special assets in my estate (such as mineral rights or copyrights)?
• Who do I know is an expert in valuing these assets?
• If I don't know any experts in valuation, who do I know who can at least know and understand the rarity of the asset?
  

For most special assets, particularly financial ones such as mineral rights or copyrights, your estate planning attorney can find an expert to value them. But for obscure and unusual items, you may know exactly who should be valuing them. My friend Joel knew the names of three people whom he trusts to properly value the rare books in his collection. If you know those people, make sure you identify them to your attorney, so that the valuation can be done accurately. As practitioners, it is our job to identify special assets, and to ask the client about assets we are unfamiliar with.

I don't mean to knock most appraisers, who are hard working and knowledgeable, and would in most cases at least know they are looking at a rare or unusual item, and would know to call in an expert. But why take that chance? They might now know the same experts you do. If you know someone whom you trust to value your collection, you should make sure to tell your estate planning attorney.

Good estate planning relies on good information. Getting it and providing it are the responsibilities of both the attorney and the client.